Online accommodations platforms generating ever higher Tourist Development Tax collections in county

Since it began turning over funds in May 2017, Airbnb has paid county more than $5.8 million

This is a website banner on the Airbnb homepage. Image from the website

In the 2020 fiscal year, online accommodations rental platforms, such as Airbnb and HomeAway, continued to increase their share of business in Sarasota County, Chief Deputy Sarasota County Tax Collector Sherri Smith reported to members of the county’s Tourist Development Council on Feb. 11.

Since May 2017, she reminded the Tourist Development Council (TDC) members, the county has been receiving a monthly check from Airbnb for the Tourist Development Tax — or “bed tax” — revenue that Airbnb hosts collect in the county. By the end of the 2017 fiscal year, Smith pointed out, the Airbnb total was $310,755.25. The figure climbed to $1,105,374.61 in the 2018 fiscal year; 1,664,256.33 in the 2019 fiscal year; and $1,792,348.50 in the 2020 fiscal year.

Each fiscal year begins on Oct. 1.

The 5% Tourist Development Tax (TDT) is charged on rentals of accommodations for six months or less time.

Through Dec. 31, 2020, Smith noted, Airbnb’s TDT collections added up to $960,971.71.

Thus, from May 2017 through December 2020, Smith said, the county “almost effortlessly” has brought in more than $5.83 million in revenue from Airbnb.

Thanks to the County Commission’s support and the assistance of the Office of the County Attorney, she continued, HomeAway and TripAdvisor, “and all their subsidiaries,” began remitting TDT collections to the Tax Collector’s Office in April 2019. Since then, she added, the county has received more than $1.97 million from those other companies. Smith paused to stress, “That’s amazing.”

A graphic in the Tax Collector’s Office’s published report on the 2020 fiscal year notes that revenue from the online platforms has increased 59.12% over the past two years. The only other type of accommodation with an increase during the same period was “Campsites,” which saw a 1.62% uptick, the report noted.

This chart compares Tourist Development Tax collections by type of accommodation over the past two years. Image courtesy Tax Collector Barbara Ford-Coates

In comparison, the revenue generated by condominiums fell 16.09%, while the collections from hotels and motels dropped 15.66%, a chart showed.

Smith also pointed out that, unlike Airbnb, the other online platforms do not give the Tax Collector’s Office staff permission to share their individual totals. Thus, she noted, each monthly TDT report combines all the online accommodations collections into one listing.

When Commissioner Nancy Detert, who chairs the TDC, asked whether Vrbo.com is among online platforms turning over TDT revenue to the Tax Collector’s Office, Smith assured Detert that it is, as it is a subsidiary of one of the other companies.

“Vrbo is now getting very popular in our area,” Detert responded.

TDC member Bharat Patel asked Smith whether the county is missing out on revenue from other online accommodations services.

This page on the Vrbo.com website shows listings on Siesta Key. Image from Vrbo.com

“Not to my knowledge,” Smith replied. Because of the way the Office of the County Attorney structured the agreements, Smith added, whenever one of the platforms adds a new subsidiary, the Tax Collector’s Office gets revenue from that one, as well.

The staff has a way to keep a check on new subsidiaries, Detert indicated.

Condominiums comprise the largest portion of TDT accounts, Smith noted: 72.37%, followed by houses, at 19.8%.

“I’m hearing a new thing,” Patel continued: “A lot of people are starting … to sublet apartments. … That may be the new frontier.”

Detert countered that the latest trend she has observed has been one in which people construct “little ‘McMansions,’” which essentially are “mini hotels,” but they are in residential neighborhoods. Detert added, “There’s just nothing worse than that nightmare.”

The Florida Association of Counties (FAC) is working to try to persuade Florida legislators to approve regulations to deal with that trend, Detert said. While the county wants to collect the bed tax from the owners of such accommodations, she continued, “We really don’t want them in the middle of residential neighborhoods.”

Smith responded that the Tax Collector’s Office staff works closely with the county’s Code Enforcement Division, which receives complaints about overflowing garbage, for example, from renters of such houses. The Tax Collector’s Office staff ensures that the owners are paying the tax, Smith added.

Garbage sits in bins outside a Siesta Key house, waiting for Waste Management pickup. The house has been rented illegally for short-term vacation purposes, neighbors have alleged. Contributed photo

Nonetheless, she concurred with Detert about other issues that prompt neighbors’ complaints, including “too much noise and too many cars.”

“And too many parties,” Detert said.

For years, homeowners in single-family neighborhoods on Siesta Key have complained about new houses constructed near Siesta Public Beach that are advertised on online platforms. Some of those structures sleep close to 30 people, based on the online ads for them.

Other details of the annual report

Among other facets of the Tax Collector’s Office’s annual TDT report, Smith noted the negative impacts of the novel coronavirus on collections.

The TDT revenue total for the 2020 fiscal year was $21,005,534.64, which was a drop of 10.04% from the Fiscal Year 2019 figure of $23,349,088.39, Smith said.

The 2020 fiscal year “started out strong,” she noted, with collections up 18.75% in October 2019, compared to the total for October 2018; a 17.93% month-over-month climb for January and a 22.78% increase in February 2020, compared to the total for February 2019.

“Unfortunately,” she continued, “March through June all saw significant decreases.”

“Typically,” Smith pointed out, “March is our highest collection period.” However, the revenue reported in March 2020 represented a 37.15% decline, compared to the figure for March 2019. The April drop was far bigger, she noted: 87.44%.

These are the figures for Tourist Development Tax collections through the 2020 fiscal year, as provided by Sarasota County Tax Collector Barbara Ford-Coates.

“It was not until July of 2020 that we started seeing improvements,” she said. “In August, we were very pleased to see a 14.61% increase,” Smith added, and in September 2020, the TDT revenue was up 31.26%, compared to the figure for September 2019.

Then Smith reported that, as of Dec. 31, 2020, the Tax Collector’s Office had 7,885 TDT accounts, which was down 3.28% from the number at the end of 2019.

For the fourth year in a row, Smith continued, the hotel/motel category generated the greatest amount of TDT revenue — 41.68%. That was followed by condominiums, at 33.96%.

Prior to the 2016 fiscal year, she noted, condominiums generated the largest amount of revenue, but each year since then, “the gap narrowed.”

Altogether, she pointed out, hotels, motels and condominiums produced 75.64% of the TDT revenue.

During the 2020 fiscal year, she added, the county welcomed two new hotels. The most recent was the Hampton Inn & Suites in North Port, which first welcomed guests in December 2020.

Dealing with delinquent accounts

Further, Smith told the TDC members, “The number of delinquent accounts has remained consistently low over the last several years. Each month, every account that does not file [a report] is contacted by our friendly but very persistent collection team” of Nicole Brown and Kenni Gregg. As a result, Smith added, “Most delinquent accounts are resolved within 30 days.”

Smith also described Brown and Gregg as “our exceptional collection team.”

(She praised them several times during her remarks.)

Gregg and Brown first rely on calls and emails to try to rectify situations in which account holders do not turn over revenue to the Tax Collector’s Office, Smith explained. Then they caution the account holder that a sign can be erected at the location of the rental property to indicate that TDT collections are in arrears, Smith said. In most cases, she added, the threat of such a sign appearing proves “very successful” in gaining the account holder’s cooperation.

Nonetheless, she continued, “When those measures don’t work, filing a warrant is the last resort.”

This graphic provides details about the types of Tourist Development Tax accounts in Sarasota County. Image courtesy Tax Collector Barbara Ford-Coates

During the 2020 fiscal year, she noted, no warrants were necessary. At the end of the previous fiscal year, she said, staff had four outstanding warrants. Two of those have been “paid in full,” Smith said, while staff continues work on the others.

Further, the Tax Collector’s Office staff continues its efforts to locate new accounts. As a result, she pointed out, 565 more were added to the list in the 2020 fiscal year, leading to a $114,000 boost in collections.

Finally, Smith noted that, traditionally, the City of Sarasota and Siesta Key are the locations with the highest percentages of TDT revenue collections each fiscal year. As of Dec. 31, 2020, she said, the City of Sarasota was in the lead, with 27.75% of the collections, “followed ever so closely by Siesta Key at 27.70%.”

Entities that collect the tax in the unincorporated parts of the county were in third, with 15.94% of the total, she added.

Commissioner Detert and TDC Vice Chair Norman Schimmel of Sarasota both commended Smith for the presentation. “Excellent report,” Detert said.

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